Public Values, Private Values

By | 2017-07-17T12:21:27+00:00 March 17th, 2017|Global Market Update|

How much is a stock worth? Chicago Board of Trade. Source: Wikipedia The short answer is, whatever someone else will pay for it. But what if there isn’t much of a market? What if the shares trade “by appointment,” only changing hands when there are motivated buyers and sellers? If you don’t have access to a private valuation consultant, what do you do? Other markets deal with infrequent trading and illiquidity all the time. Bonds and real estate are both idiosyncratic – no bond [...]

Tinker, Tailor, Soldier, Central Banker?

By | 2017-07-17T12:21:27+00:00 March 16th, 2017|Global Market Update|

What are the most dangerous jobs? Photo Luc Viatour. Source: Wikipedia Several professions come to mind: stunt performers, combat troops, firefighters. But have you ever thought that being a central banker could merit hazard pay? That’s certainly the case in Russia. Ten years ago, their chief bank examiner, Andrey Kozlov, was shot and killed by two gunmen. He had been investigating money laundering and other financial crimes. In Russia at that time, many of the banks were controlled by organized crime groups. He had [...]

The Essential Federal Reserve

By | 2017-07-17T12:21:27+00:00 March 15th, 2017|Global Market Update|

Has the Fed become irrelevant? FOMC Meeting. Public Domain. Source: Philadelphia Fed In case you hadn’t noticed, the Fed is raising rates today. We’ve come a long way from the rock-star Greenspan era – where observers tried to guess which way Fed policy was headed by the girth of The Great One’s briefcase, and markets hung on his every word. Now, with quarterly dot-plots and press conferences, we’re awash in information. By trotting out Fed Governors and Presidents at every opportunity to give interviews [...]

Critical, Critical, Critical

By | 2017-07-17T12:21:27+00:00 March 14th, 2017|Global Market Update|

Are we in a critical state? Photo: Priscilla Westra. Source: Fancycrave A critical state is a concept from physical chemistry where something is ready for a phase change. Think of water turning to ice. When you look at a body of water that is just about to freeze, it looks the same as normal cold water. But microscopically, they’re quite different. When water is close to freezing, it’s filled with innumerable tiny ice crystals – crystals so small that the water remains in liquid [...]

Dangerous Myths

By | 2017-07-17T12:21:27+00:00 March 13th, 2017|Global Market Update|

Are some made-up stories hazardous to our health? Mjöllnir on Tórshavn Coat of Arms. Source: Wikipedia Some tall tales seem benign – like accounts of Mjöllnir, Thor’s battle hammer that always comes back to him after he throws it. In Norse mythology, Thor is kind of a dumb ox, always misplacing his things. So it’s convenient for him to have something that he won’t lose, even after he gets angry and throws it. But some stories are dangerous. They shape the way we look [...]

European Futures

By | 2017-07-17T12:21:27+00:00 March 10th, 2017|Global Market Update|

Where is Europe going? Source: Wikipedia An old joke from the ‘90s stated that the most boring headline of the time was, “Whither NATO: Canadian Proposal has Merit.” Europe has been struggling with its identity for as long as I can remember. During the Cold War, it was at the center of the ideological struggle between communism and democratic capitalism; since then it has tried to define itself economically, politically, and culturally. Is Europe simply an accident of geography? Or is it something more? [...]

Lies and the Lying Liars with Fake Financials

By | 2017-07-17T12:21:28+00:00 March 9th, 2017|Global Market Update|

Can we find financial fraud in advance? Enron Logo. Source: Wikipedia Not always. But published financials can give us clues when managers might be cooking their books. Published financial statements are supposed to reflect reality: they’re supposed to give let us know how the business is doing in its day-to-day operations. But we live in a world where investors – and computer trading systems – often fixate on just one number: earnings per share (EPS). That number is supposed to the single best indicator [...]

Foreign Stocks

By | 2017-07-17T12:21:28+00:00 March 8th, 2017|Global Market Update|

Will Trump’s travel ban hurt the economy? World population migration, 2016. Blue = gain; orange = loss. Source: Wikipedia The short answer is no. The US only accepted 70,000 refugees every year anyway. That’s a pittance in an economy that employs over 160 million people. A much bigger impact would come from a crackdown on illegal immigrants already in the US. The US employs about 8 million unauthorized immigrants – about 5% of the workforce. These people are concentrated in certain industries and certain [...]

Health Care Values

By | 2017-07-17T12:21:28+00:00 March 7th, 2017|Global Market Update|

What makes health care a good (or bad) investment? Photo: Clever Cupcakes. Source: Wikimedia Commons Lots of people are looking at health care stocks. Since the end of 2015, their performance has been fairly modest, rising by less than 6%, while the rest of the market has returned almost 18%. Health care is among the cheaper sectors, with a forward P/E ratio of only 16.4x, vs the market’s 18.4x. Only telecom, which has falling revenues, is cheaper. So they are intriguing to value investors. [...]

Robotic Taxes?

By | 2017-07-17T12:21:28+00:00 March 6th, 2017|Global Market Update|

Should we institute a tax on robots? Photo: Xavier Caré. Source: Wikimedia Commons That’s what Bill Gates thinks. When people fear what new technology is going to do to them, they’ll avoid it rather than try to shape it. If there’s a robot tax, that might allow countries to provide pensions and training so people can adjust to their new economies. If the robots are eating our jobs, then we need to find new jobs – like blacksmiths learning how to build and repair [...]